During her presentation of the Union Budget 2023-24 before the Parliament on Wednesday, Nirmala Sitaraman, Union Minister for Finance and Corporate Affairs, made a number of significant announcements to boost the economy, MSMEs, infrastructure, and investment.
Priorities of the Budget
The Budget adopts the following seven priorities. They complement each other and act as the Saptarishi guiding us through the Amrit Kaal: Inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector. To better allocate scarce resources for development needs, the financing of select schemes will be changed, on a pilot basis, from ‘input-based’ to ‘result-based’. This Budget builds on the government’s focus on green growth.
Credit Guarantee for MSMEs
The revamped credit guarantee scheme for MSMEs will take effect from April 1, 2023, through the infusion of Rs 9,000 crore in the corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit will be reduced by about 1%. In cases of failure by MSMEs to execute contracts during the Covid period, 95% of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings. This will provide relief to MSMEs.
Budget Estimates 2023-24
Coming to 2023-24, the total receipts other than borrowings and the total expenditure are estimated at Rs 27.2 lakh crore and Rs 45 lakh crore respectively. The net tax receipts are estimated at Rs 23.3 lakh crore. The fiscal deficit is estimated to be 5.9% of GDP. The revised estimate of the fiscal deficit is 6.4% of GDP, adhering to the budget estimate. The revised estimate of the total receipts other than borrowings is Rs 24.3 lakh crore, of which the net tax receipts are Rs 20.9 lakh crore. The revised estimate of the total expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh crore. I reiterate my intention to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26. To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs 11.8 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at Rs 15.4 lakh crore.
Empowered and Inclusive Economy
The Agriculture Accelerator Fund will be established to support young entrepreneurs in rural areas, who are starting agri-businesses. The aim is to bring innovative and cost-effective solutions to the challenges faced by farmers and to modernize agricultural practices, boosting productivity and profitability. The agriculture credit target will be raised to Rs 20 lakh crore, with a focus on animal husbandry, dairy, and fisheries. The government has already invested Rs 2,516 crore to computerize 63,000 Primary Agricultural Credit Societies (PACS). The government will launch a new sub-scheme of PM Matsya Sampada Yojana with a targeted investment of Rs 6,000 crore to improve the livelihoods of fishermen, fish vendors, and micro and small enterprises in the fishing industry, as well as improve value chain efficiencies and expand the market.
A new mission, Pradhan Mantri PVTG Development Mission, will also be launched to improve the socio-economic conditions of the particularly vulnerable tribal groups (PVTGs) with Rs 15,000 crore being made available for implementation over the next three years.
Infrastructure and Investment
Capital investment outlay is being increased steeply for the third year in a row by 33% to Rs 10 lakh crore, which would be 3.3% of GDP. The ‘Effective Capital Expenditure’ of the Centre is budgeted at Rs 13.7 lakh crore, which will be 4.5% of GDP. The newly established Infrastructure Finance Secretariat will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure and power. The Harmonized Master List of Infrastructure will be reviewed by an expert committee for recommending the classification and financing framework suitable for Amrit Kaal. A capital outlay of Rs 2.40 lakh crore has been provided for the Railways.
One hundred critical transport infrastructure projects for ports, coal, steel, fertilizer, and food grains sectors will be taken up on priority with an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources.
Urban Infrastructure Development Fund
An Urban Infrastructure Development Fund (UIDF) will be established through the use of priority sector lending shortfall. This will be managed
by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF. Funds to the tune of Rs 10,000 crore per annum will be earmarked for this purpose.
Support to state governments
FM has decided to continue the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs 1.3 lakh crore. Through property tax governance reforms and ring-fencing user charges on urban infrastructure, cities will be incentivized to improve their credit worthiness for municipal bonds.
To enhance business activities in GIFT IFSC, the following measures will be taken: Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI; Permitting acquisition financing by IFSC Banking Units of foreign banks; Establishing a subsidiary of EXIM Bank for trade re-financing, and recognizing offshore derivative instruments as valid contracts.
Capacity Building in Securities Market
To build the capacity of functionaries and professionals in the securities market, SEBI will be empowered to develop, regulate, maintain and enforce norms and standards for education in the National Institute of Securities Markets and to recognize awards of degrees, diplomas and certificates.